Correlation Between John Hancock and GAMCO Natural
Can any of the company-specific risk be diversified away by investing in both John Hancock and GAMCO Natural at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining John Hancock and GAMCO Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Hancock Income and GAMCO Natural Resources, you can compare the effects of market volatilities on John Hancock and GAMCO Natural and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in John Hancock with a short position of GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Hancock and GAMCO Natural.
Diversification Opportunities for John Hancock and GAMCO Natural
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between John and GAMCO is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding John Hancock Income and GAMCO Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Natural Resources and John Hancock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on John Hancock Income are associated (or correlated) with GAMCO Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Natural Resources has no effect on the direction of John Hancock i.e., John Hancock and GAMCO Natural go up and down completely randomly.
Pair Corralation between John Hancock and GAMCO Natural
Considering the 90-day investment horizon John Hancock is expected to generate 1.65 times less return on investment than GAMCO Natural. But when comparing it to its historical volatility, John Hancock Income is 1.65 times less risky than GAMCO Natural. It trades about 0.1 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 447.00 in GAMCO Natural Resources on August 25, 2024 and sell it today you would earn a total of 135.00 from holding GAMCO Natural Resources or generate 30.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Hancock Income vs. GAMCO Natural Resources
Performance |
| Timeline |
| John Hancock Income |
| GAMCO Natural Resources |
John Hancock and GAMCO Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Hancock and GAMCO Natural
The main advantage of trading using opposite John Hancock and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Hancock position performs unexpectedly, GAMCO Natural can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GAMCO Natural will offset losses from the drop in GAMCO Natural's long position.| John Hancock vs. Invesco High Income | John Hancock vs. Blackrock Muniholdings Ny | John Hancock vs. MFS Investment Grade | John Hancock vs. Federated Premier Municipal |
| GAMCO Natural vs. MFS High Income | GAMCO Natural vs. MFS Investment Grade | GAMCO Natural vs. Eaton Vance National | GAMCO Natural vs. Invesco High Income |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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